Indiana’s popular 21st Century Scholars program — where full-ride scholarships are promised to needy kids who study hard and stay out of trouble — is in deep financial trouble.
The program is growing so fast that its $28 million budget will need a $30 million boost in the next state funding cycle, and nearly triple that amount by 2017.
That’s just to keep pace with booming enrollments, which more than doubled in 2009, when the crop of potential enrollees was expanded from seventh- and eighth-graders to include sixth-graders — contributing to the huge need for scholarship money in four to six years when they start to enter college.
Without changes, the state will be forced to continue robbing from Indiana’s primary scholarship program for needy students — the Frank O’Bannon grants — which help the most disadvantaged pay for college. Over the past five years, 13 percent to 18 percent of that program’s annual budget has been redirected to the 21st Century program.
“If we don’t do something, we won’t have any money to take care of other need-based students. There just isn’t enough money,” said Teresa Lubbers, the state’s commissioner for higher education, whose staff spent a year examining the program.
Lubbers’ review found that 1 out of 5 recipients of the 21st Century scholarship — which is based both on merit and need — should not be getting the full ride because they were no longer classified as needy by the time they reached their senior year.
That means 20 percent of those need-based taxpayer-funded scholarships are going to students who might not need it.
Lubbers will present a handful of recommendations to rectify that at the State Budget Committee meeting on Sept. 8. Lawmakers asked for a review of financial aid programs last year in response to the state’s financial crisis.
Aid for students has been one state program to escape mandatory budget cuts. But Gov. Mitch Daniels has made no guarantees about next year.
“Obviously, this program has very worthy goals,” Daniels said Monday. “But is it serving the young people it was designed for? Is it working or not working? No program, however attractive its intention, can be immune from answering these questions.”
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Goal was to promote college
Established during former Gov. Evan Bayh’s administration in 1990, the 21st Century Scholars program was a way to encourage students to stay out of trouble and in school.
Students who qualify for free and reduced-price lunches sign a simple pledge to stay drug-free and maintain a 2.0 grade-point average (which could change to 2.5 under one recommendation) and earn four years of free college tuition at an Indiana public university. Students also may attend a private school in Indiana with a significant portion of the tuition paid by the state. Those attending for-profit schools in Indiana are granted money equal to Ivy Tech’s tuition costs.
Some scholarship programs in other states, including merit-based awards in Michigan and Tennessee, have been trimmed because of budget cuts by tightening standards or reducing the amount of the grant.
Indiana’s program, which provides scholarships based on need and merit, has remained uncut, as have similar programs in Oklahoma, Wisconsin and Washington, said Seana Murphy, who oversees the program for Indiana.
Indiana’s program has enrolled 10,000 to 15,000 seventh- and eighth-graders a year on average, but that soared 102 percent in 2009 when 31,463 students enrolled after state lawmakers allowed sixth-graders to sign up. This year’s number promises to be even higher.
In order to qualify, a student need only prove financial need as of the year of sign-up.
That means if a family of four earns less than $39,220 a year when the student is a sixth-grader, he or she could sign up for the program. The following year, if mom or dad gets a better job or wins the state lottery, it won’t matter. A deal is a deal.
“It’s an entitlement,” said Lubbers. “If you’ve done what you said you are going to do, you make good on your promise and make sure they go to college.”
And if there isn’t enough money in the budget to pay for all that tuition? “The only thing you can do is borrow the money,” she said.
In 2008, the state paid out $28.4 million in 21st Century scholarship dollars from the 21st fund. But it actually needed $66 million. The balance was made up by taking more than $37 million from the $195 million O’Bannon budget, which is bigger and serves more kids, albeit with less money per student.
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The result is that the pool of O’Bannon students received less money on average. Financial need is the primary requirement for those grants.
Study finds flaws in system
One way to address this problem, Lubbers said, is to make sure the 21st Century Scholars money is being doled out appropriately. And according to her study, it’s not.
Using information supplied by students before they graduate from high school, cross-checked with federal financial-aid forms that include family income, researchers found that about 20 percent of those who signed up as middle school students no longer met the need requirement as seniors.
But the way the plan works today, nobody notices because nobody checks, and they can’t, Lubbers said. It would take an amendment to the current legislation to require a senior-year assessment of financial need. Some states, she said, do have programs that reassess and then adjust the awards if needed.
State Sen. Luke Kenley, R-Noblesville, who chairs the State Budget Committee, said he supports changing the process to have stronger controls on verifying compliance, including a reassessment of financial need.
“I don’t think the program was ever conceived to be there for everybody,” Kenley said. “I think there was the hope that it would reach out to people who otherwise may not have a chance to go to college, and that of course is based on need.
“We need to hang on to every dollar we can.”
“It doesn’t seem right”
Not everyone agrees with the proposed change.
April Mangas, a 38-year-old single mom with four sons — three of whom are 21st Century scholars — said any hint of backing off a promise made in middle school would be unfair.
“I totally disagree with that kind of change,” said Mangas, a third-shift factory worker from Union City. “Most of the people who apply, like my boys, they just want to go to college.
“Who’s to say that two years later I don’t lose my job? Are they going to reassess it again? It doesn’t seem right.”
Her oldest son, Darcy Thomas, is a 20-year-old Purdue sophomore studying computer science and working as a mentor for younger 21st Century scholars.
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“I’ve never come across someone whose financial (status) had changed that much,” he said. “I know the program is expanding, but you’d think that would be accounted for. They knew all these people would be eligible.”
Lubbers said any change would likely not apply to students who are already in the program — good for families, but bad for the state because the financial impact of tighter controls would not be realized for six years.
More than 100,000 students have taken advantage of the program since the first class of 1995, and the percentage of kids going to college right after high school in Indiana has increased from 33 percent in 1986 to 63 percent in 2006.
The results are not so good for actual college degrees. The 21st Century scholars graduate from college at a lower rate than the general student population, but slightly better than nonscholars who also are financially needy.
The specter of families having to prove they are still poor when the student is a senior in high school might give some a reason to stay poor. Lubbers acknowledged that it was possible some parents might pass on a promotion or a better job in exchange for thousands of dollars in free tuition.
Indiana State University senior Harmony Linder, a 21st Century scholar from Terre Haute, said periodic reviews would put many parents in a bind if they happened to make “a little more, but still might not be able to pay for college.”
“My parents have worked full time, and I have worked part time my entire four years of college,” Linder said. “I also chose to go to a college close to home and chose to live at home.”
Call Star reporter Dan McFeely at (317) 444-6253.